In a Goldfish Bowl

(See front cover)

Most of last week, Industrial Recovery Administration Administrator General Hugh Samuel Johnso, U. S. A. retired, was to be found among a prodigious litter of waste paper and Old Gold cigaret butts in a little cubicle on the third floor of Washington's new colossal Department of Commerce building. His clothing askew, his eyes bloodshot for want of sleep, he was receiving fidgety and excited businessmen at the rate of 100 per day. Occasionally he would pick up a telephone, perhaps to bark, as he did to Motormaker Roy Dikeman Chapin (Hudsons), Hoover Secretary of Commerce: "I've been listening to that line of bunk from you fellows long enough. You'd better change your tune. Good-by."

If General Johnson, the sort of oldtime cavalryman who would bite a horse's ear if he lost his quirt, needed any moral support it was supplied last week in the person of Bernard Mannes Baruch, his great & good friend. The tall, smiling Jew with the fine thoughtful head, arrived in Washington just as he had done almost every week for the past 20 years. But this arrival set official Washington by the ears. Amid a blaze of unwelcome publicity, he started a report for President Roosevelt on the recovery plan and a set of recommendations on U. S. policy at the London Conference. When a citizen in Oklahoma sent a telegram to "Bernard M. Baruch. Unofficial President of the United States." Mr. Baruch, no seeker after glare and glory, retired to his suite at the Carlton Hotel. "I'm not even a $1-a-year man." he joked, trying to dampen reports of his semi-official importance. "I'm an 85-c- a year man. The President has reduced all Federal salaries 15%."

Codes, Codes, Codes. Though President Roosevelt was off vacationing and Cabinet absences left Attorney General Cummings the Government's ranking officer on the job, Messrs. Baruch & Johnson had plenty of company in Washington last week. There was scarcely a private dining or meeting room in town which was not packed with the members of this or that trade group haggling over a code regulating minimum wages, maximum hours of work, prices and output which would make them eligible to do business under the Industrial Recovery Act. General Johnson flew to Manhattan during the week to advise other trade associations on their codes. In Washington he and his staff were in consultation with code-making industrialists from 8 a. m. until as late as two the next morning--a taste of their all-summer job. Then he took to the air in a stirring speech expounding his own principles of administration. His major thesis: "American industry has got to save itself." His prime warning: "This danger of runaway prices is a deadly serious matter. This is no time to get rich quick." His advice to "open shop" employers: "The Administration is required by the Act to obtain a fair deal for labor in any unorganized industry."

But, perhaps most of all, people wanted to know his idea of a minimum wage. Said he: "The cost of living differs in different regions. . . . The question cannot be answered by any single inflexible rule. . . . But under present conditions and as far as the lowest priced class of workers are concerned, an average of about 32 hours a week at not less than 45-c- an hour would do this job."*

Labor v. Capital. "Pineapples" are what General Johnson calls thorny problems. Last week his great adventure was festooned with two large "pineapples." Pineapple No. 1 was the classic conflict of Capital v. Labor, raised not from out side but right within the Administration.

Proud and pleased was General Johnson that some 30 industries were about ready to hand in their proposed codes. The wheels of I. R. A.'s machinery seemed to be whirring productively when up stepped Madam Secretary of Labor Perkins. She had to be heard. The law had set up a special Labor Board (see p. 16) especially to advise I. R. A., and Madam Perkins was its head. She & Board were determined to prevent employers from taking advantage of employes in the blind haste to get the recovery program going.

Specifically the Board had learned that in a number of cases industries were rapidly patching up their own company-controlled unions to get under the "collective bargaining'' wire of the Recovery Act. In Kentucky coal miners who refused to join hated company unions were being evicted from company-owned houses. The Board angrily pointed to that section of the act which stipulates: "Employes shall have the right to organize and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint or coercion of employers of labor." When open hearings begin on the codes which have been largely drafted from the employers' viewpoint, the old Capital v. Labor fight is destined to come tramping out into the open to make General Johnson's days miserable.

Prices & Consumers. Concerning itself chiefly with the paramount issues of wages and re-employment, the I. R. A. had failed to lay down specifications on intra-industry price-fixing, a vital factor to competing producers as well as to consumers. To clear up that Pineapple No. 2 General Johnson announced: "In these codes it will be proper for an industry to say it will not sell below cost of production. But if they use the code to fix extortionate prices. I should have to step in. . . ." Administrator Johnson hoped that industries would keep prices in the background "for at least 90 days" until the nation's purchasing power had gotten a head start on rising price levels.

But how would General Johnson step in to control prices, once the President had suspended the Sherman Anti-Trust Law to permit industries to make price agreements? He had two courses open: 1) slap an operating license upon an industry that starts kiting prices and then, unless prices return to earth, revoke the license and put the industry temporarily out of business; 2) get the President to rescind his suspension of the Anti-Trust law for the offending industry, leaving it open to prosecution for monopolistic price-upping.

Cotton Textiles. "We're gonna do this job in a goldfish bowl. We'll listen to everybody before we get through," promised General Johnson, referring to public hearings on all codes before their submission to the President for final approval. First "goldfish" to go on exhibit in the Washington bowl was the cotton textile industry. Week before a cotton textile code had been turned in to General Johnson. He thought the industry had done "a very beautiful job" even though its minimum wage fell $4.40 per week short of General Johnson's own standard and its maximum week was eight hours longer than that he specified over the radio. Hearings on this cotton code were to begin this week and were counted on to develop the procedure for the whole recovery administration.

Johnson & Friends. Only the last part of General Johnson's life has been spent outside the service. They had hardly stopped shooting Indians near Fort Scott, Kans. when he was born there in 1882. He graduated from West Point, promptly married a colonel's daughter. To eke out a cavalry second lieutenant's pay. he wrote a pair of boys' books: Williams of West Point, Williams on Service. A law degree from the University of California made him eligible for the Judge Advocate General's Department in 1916. Odd jobs in the Army: feeding San Francisco earthquake refugees, administering Yosemite and Sequoia Parks, accompanying Pershing's punitive expedition to Mexico. In Washington during the War he went on the General Staff as chief of Purchase & Supply. It was he who conceived and directed the Wartime draft.

President Wilson's War Industries Board brought to Washington two men destined to play a large part in General Johnson's later life. One was the board's chairman, Mr. Baruch. The other was George Nelson Peek of Moline, Ill., who had spent 25 years with plow-making concerns in the Midwest. Meeting for the first time under Wartime pressure, this trio found that they all thought and acted pretty much alike about their joint problems. Each spoke his mind bluntly. Each dug hard for facts. Each could put his theories into practice. A three-cornered friendship, Baruch-Johnson-Peek, was formed under Democratic President Wilson which 15 years later became the cornerstone for the next Democratic President's whole recovery program.

The War over, Mr. Baruch returned to Manhattan and Wall Street as the simon-pure capitalist who put his millions out to work for him and make more millions but took no regular business job. Mr. Peek induced General Johnson to resign from the Army in 1919, accompany him to Moline. There as president and vice president they took over Moline Plow Co., set out with high hopes to make millions of their own. But they had picked a dead cock in the pit. as Mr. Baruch could have told them. Failing to get the financing they had been promised, they were forced to liquidate their company after a few luckless years. General Johnson took a fling alone in the farm implement business while Mr. Peek turned to cornstalks and farm relief.

Meanwhile in Manhattan Mr. Baruch had been giving much thought not only to farm relief but also the economic state of the Union. The ''Boys from Moline" drifted in and out of his office regularly. All three argued, harangued, hammered out their ideas on the anvil of friendly dispute. The more Mr. Baruch saw of them, the more he liked them. And in 1927 he suggested that General Johnson join him at No. 120 Broadway, not as an employe or underling, but as an associate and equal. They would pool their brains, their efforts. As for pay, no man could go along with Mr. Baruch and starve.

General Johnson accepted, becoming Capitalist Baruch's chief-of-staff. Together they studied industries, companies and trends before marching the Baruch millions into action. They made long-range analyses of silver, automobiles, construction. In a few years General Johnson had become an expert practicing economist, an encyclopedia of industrial facts and figures. They were liquid when the crash came.

But just making money was not enough for public-spirited "Barney" Baruch. Born in South Carolina, son of a country doctor, he had known the carpetbaggers, had been a Democrat ever since. He was also a scion of a long line of intellectual Spanish Jews. When he made his first small pile and went to New York, he instinctively mixed intellectual observation with a shrewd trading sense. As the 20's came booming along, "Barney" Baruch watched a great new national economy unfold and he was not satisfied with it. Neither was Chief-of-Staff Johnson. Together they weighed and measured changes and reforms. A Republican government at Washington was letting industry run wild. President Hoover was staking too much on U. S. foreign trade. Said Nationalist Johnson to Naturalist Baruch: "One hundred and thirty-five million people constitute a helluva market, and so why not serve it? ' Secretary of the Treasury Ogden Mills's budget figures smelled to heaven. General Johnson broke them down, handed Mr. Baruch an analysis of Federal finance which he took to Washington and used to prove that Mr. Mills was $3,000,000,000 off in his estimates. Republican farm relief? Messrs. Baruch and Johnson summoned Friend Peek and together they wrote Al Smith's farm plank for 1928. Mr. Baruch never made a public address without first trying it out on General Johnson. "Hell, chief, that's a lot of bunk." General Johnson would often say and then they would sit down to thrash the fiction out of the facts.

When President Roosevelt asked Mr. Baruch who would be the best man to run Farm Relief. 1933 style, Mr. Baruch promptly recommended Friend Peek who now is Washington's Agriculture Adjustment Administrator. When President Roosevelt consulted Mr. Baruch on putting the new economy into legislative form. Mr. Baruch promptly turned General Johnson over to the Administration. President Roosevelt hatched his Brain Trust out of college professors but he was learning that there are brains in the Army too.* For weeks under cover, General Johnson grew up with the Recovery Act as it was being drafted. When it was passed and he was appointed Administrator, it was quickly called a ''Baruch measure" and General Johnson a "Baruch man."

As the country's most potent private citizen, Mr. Baruch dislikes both names, though he does not dispute their technical accuracy. "Hugh Johnson," says he, ''is not a 'Baruch man.' He's nobody's man and he is standing on his own feet." But in a fatherly way Mr. Baruch, now 62, still telephones General Johnson every morning, asks how he is getting on, advises him not to work so late at night.

Since he began work on the recovery program, neither his wife, nor his son, Kilbourne, nor his two fox-terriers Toughy & Tottie, nor his home at Hewlett, L. I. have seen much of General Johnson. Somehow he has found time for honest, soldierlike press talks--of which the keynote is typical of the whole Roosevelt Administration: hopeful but non-prophetic--like this one:

"The emergency phase of this job is to try to get people back to work. That's what's worrying everybody. And we've got to shorten the week and pay a living wage for a shorter week. How it's going to work out, where it's going, I don't want to say. There's been too much promising all along through this depression.

"The industries want to do the job as much as we do. I don't detect any slacking. I think it's going to work and put several million men back to work this summer. Maybe a snag somewhere along the line--we may stub our toes--but we're going to make a stab at it."

*$14.40 per week.

*Other Army men at work on recovery last week were Col. Donald Hubbard Sawyer, acting Federal Administrator of Public Works and his assistant, Col. George Spalding, who will handle $3,300,000,000.

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